by The Great Walter E. Williams

Several recent polls, plus the popularity of Sen. Bernie Sanders, demonstrate that young people prefer socialism to free market capitalism. That, I believe, is a result of their ignorance and indoctrination during their school years, from kindergarten through college. For the most part, neither they nor many of their teachers and professors know what free market capitalism is.

Free market capitalism, wherein there is peaceful voluntary exchange, is morally superior to any other economic system. Why? Let's start with my initial premise. All of us own ourselves. I am my private property, and you are yours. Murder, rape, theft and the initiation of violence are immoral because they violate self-ownership. Similarly, the forcible use of one person to serve the purposes of another person, for any reason, is immoral because it violates self-ownership.

Tragically, two-thirds to three-quarters of the federal budget can be described as Congress taking the rightful earnings of one American to give to another American — using one American to serve another. Such acts include farm subsidies, business bailouts, Social Security, Medicare, Medicaid, food stamps, welfare and many other programs.

Free market capitalism is disfavored by many Americans — and threatened — not because of its failure but, ironically, because of its success. Free market capitalism in America has been so successful in eliminating the traditional problems of mankind — such as disease, pestilence, hunger and gross poverty — that all other human problems appear both unbearable and inexcusable. The desire by many Americans to eliminate these so-called unbearable and inexcusable problems has led to the call for socialism. That call includes equality of income, sex and race balance, affordable housing and medical care, orderly markets, and many other socialistic ideas.

Let's compare capitalism with socialism by answering the following questions: In which areas of our lives do we find the greatest satisfaction, and in which do we find the greatest dissatisfaction? It turns out that we seldom find people upset with and in conflict with computer and clothing stores, supermarkets, and hardware stores. We do see people highly dissatisfied with and often in conflict with boards of education, motor vehicles departments, police and city sanitation services.

What are the differences? For one, the motivation for the provision of services of computer and clothing stores, supermarkets, and hardware stores is profit. Also, if you're dissatisfied with their services, you can instantaneously fire them by taking your business elsewhere. It's a different matter with public education, motor vehicles departments, police and city sanitation services. They are not motivated by profit at all. Plus, if you're dissatisfied with their service, it is costly and in many cases even impossible to fire them.

A much larger and totally ignored question has to do with the brutality of socialism. In the 20th century, the one-party socialist states of the Union of Soviet Socialist Republics, Germany under the National Socialist German Workers' Party and the People's Republic of China were responsible for the murder of 118 million citizens, mostly their own. The tallies were: USSR 62 million, Nazi Germany 21 million and PRC 35 million

DEATH BY GOVERNMENT [www.hawaii.edu]

No such record of brutality can be found in countries that tend toward free market capitalism.

Here's an experiment for you. List countries according to whether they are closer to the free market capitalist or to the socialist/communist end of the economic spectrum. Then rank the countries according to per capita gross domestic product. Finally, rank the countries according to Freedom House's "Freedom in the World" report. You will find that people who live in countries closer to the free market capitalist end of the economic spectrum not only have far greater wealth than people who live in countries toward the socialistic/communist end but also enjoy far greater human rights protections.

As Dr. Thomas Sowell says, "socialism sounds great. It has always sounded great. And it will probably always continue to sound great. It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster."

Walter E. Williams is a professor of economics at George Mason University.

The Great Thomas Sowell on Socialism -

Socialism for the Uninformed
By Dr. Thomas Sowell

Socialism sounds great. It has always sounded great. And it will probably always continue to sound great. It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster.

While throngs of young people are cheering loudly for avowed socialist Bernie Sanders, socialism has turned oil-rich Venezuela into a place where there are shortages of everything from toilet paper to beer, where electricity keeps shutting down, and where there are long lines of people hoping to get food, people complaining that they cannot feed their families.

With national income going down, and prices going up under triple-digit inflation in Venezuela, these complaints are by no means frivolous. But it is doubtful if the young people cheering for Bernie Sanders have even heard of such things, whether in Venezuela or in OTHER COUNTRIES AROUNND THE WORLD THAT HAVE TURNED THEIR ECONOMIES OVER TO POLITICIANS AND BUREAUCRATS TO RUN.

The anti-capitalist policies in Venezuela have worked so well that the number of companies in Venezuela is now a fraction of what it once was. That should certainly reduce capitalist "exploitation," shouldn't it?

But people who attribute income inequality to capitalists exploiting workers, as Karl Marx claimed, never seem to get around to testing that belief against facts — such as the fact that none of the Marxist regimes around the world has ever had as high a standard of living for working people as there is in many capitalist countries.

Facts are seldom allowed to contaminate the beautiful vision of the left. What matters to the true believers are the ringing slogans, endlessly repeated.

When Senator Sanders cries, "The system is rigged!" no one asks, "Just what specifically does that mean?" or "What facts do you have to back that up?"

In 2015, the 400 richest people in the world had net losses of $19 billion. If they had rigged the system, surely they could have rigged it better than that.

But the very idea of subjecting their pet notions to the test of hard facts will probably not even occur to those who are cheering for socialism and for other bright ideas of the political left.

How many of the people who are demanding an increase in the minimum wage have ever bothered to check what actually happens when higher minimum wages are imposed? More often they just assume what is assumed by like-minded peers — sometimes known as "everybody," with their assumptions being what "everybody knows."

Back in 1948, when inflation had rendered meaningless the minimum wage established a decade earlier, the unemployment rate among 16-17-year-old black males was under 10 percent. But after the minimum wage was raised repeatedly to keep up with inflation, the unemployment rate for black males that age was never under 30 percent for more than 20 consecutive years, from 1971 through 1994. In many of those years, the unemployment rate for black youngsters that age exceeded 40 percent and, for a couple of years, it exceeded 50 percent.

The damage is even greater than these statistics might suggest. Most low-wage jobs are entry-level jobs that young people move up out of, after acquiring work experience and a track record that makes them eligible for better jobs. But you can't move up the ladder if you don't get on the ladder.

The great promise of socialism is something for nothing. It is one of the signs of today's dumbed-down education that so many college students seem to think that the cost of their education should — and will — be paid by raising taxes on "the rich."

Here again, just a little check of the facts would reveal that higher tax rates on upper-income earners do not automatically translate into more tax revenue coming in to the government. Often high tax rates have led to less revenue than lower tax rates.

In a globalized economy, high tax rates may just lead investors to invest in other countries with lower tax rates. That means that jobs created by those investments will be overseas.

None of this is rocket science. But you do have to stop and think — and that is what too many of our schools and colleges are failing to teach their students to do.

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA

Economics lesson for the Idiot Socialists/Statists Who LOVE GOVERNMENT -

4 Reasons Why Socialism Fails

[mises.org]

The new “democratic socialists” want to make their followers believe that one could redistribute wealth and income and socialize a large part of the economy without harming production and productivity. They claim that a comprehensive control of the economy by the government would bring more justice and more prosperity. The democratic socialists want more planning and less market. Yet this postulate ignores that socialism does not fail by accident or circumstance. Socialism fails because it suffers from four fundamental design defects.

First, socialism eradicates private property and markets and thus eliminates rational calculation.

Second, socialism allows soft budgets, so there is no mechanism in place to discard inefficient production methods.

Third, abolishing private property and replacing it by the state distorts the incentives.

Four, the socialist system with its absence of private property and of free markets inhibits the economic coordination of the system of division of labor and capital.

The Importance of Market Prices

Socialism cannot bring prosperity because it destroys the market functions of private property. Under socialism, private ownership of the means of production no longer exists, and thus there are no market prices for capital goods available. Institutionally, socialism consists in abolishing the market economy and replacing it with a planned economy. By doing away with private property of the means of production, one wipes-out market information and valuation. Even if the socialist administration puts price tags on the consumer goods, and the people may own consumer goods, there is no economic orientation about the relative scarcity of capital goods.

Many supporters of socialism suppose that business management is nothing more than a kind of registration or simple bookkeeping. Vladimir Lenin believed that the knowledge of reading and writing, and some expertise in the use of the basic arithmetic operations and some training in accounting, would be enough for the conduct of business operations. The socialists promote engineering and science, but they believe that there is no need for the entrepreneur. The regime may spend heavily on education but when there is no entrepreneurial economy, the people will stay poor, nevertheless.

The Role of Scarcity

The socialists ignore scarcity. They assume that a plan could stipulate the allocation of goods and services according to needs and wants. Yet the planners must answer how such a plan should find its standards of valuation. Without prices and markets, there is no orientation about which factors of production are more and which are less valuable. The socialist planners have no knowledge of the costs of the production process. Without markets, the prevailing value structure remains unknown.

Supply in relation to want makes goods valuable. In a market economy, the relative prices show the degrees of scarcity. By observing the prices, the market participants receive the information that guides them to align their economic decisions to the market signals. The price system informs about relative scarcities. There is no need for a comprehensive system of detailed information about the origin and nature of the scarcity beyond the prices to make a rational decision. The price system reduces complexity for the individual decision maker to the single number of the price. In a market economy, the economic participants need only partial knowledge to act rationally. In capitalism, the motivation to gain profits and to avoid costs work as an incentive to behave rationally. In a market economy, the prices provide information and incentives simultaneously for the seller and the buyer.

All production faces the problem of an almost unlimited number of ways how to produce a good. One can manufacture a commodity with very different raw materials, technologies, and combinations of the production factors and in an endless variety of designs.

Setting Priorities

Along with the technological feasibility of a project, one must calculate its profitability. Without costs in relation to sales, a technical evaluation makes no sense. That a project is technically viable does not mean that its realization is also worthwhile. What appears efficient from a technical point of view need not be so in terms of economic expediency. With costs left out of the consideration, socialist production is blind to the risk of producing goods that cost more than they are worth. In a socialist economy, even a benevolent dictator could not provide the right mix of goods in terms of price and quality

Socialists suppose that to implant their rule on the economy all that is necessary is to socialize the private companies, replace the management, and install worker councils, and the new economic order would flourish. The early socialists expected that abundance would follow not least because now the workers would get what before went into the hands of the capitalists as profits. Yet the socialists ignored that the socialization of the means of production was just the beginning. They failed miserably in running the economy.

The error of socialist economic planning is to assume that business management could also continue as before after socialist operators take over the capitalist management. While the socialist regime can train administrators and engineers and put the party members in the position of directors, these new leaders cannot decide according to relative scarcities because there is no longer a private property-based entrepreneurial price system available.

The reality of socialism is the command and obedience. Without orientation from markets and prices, brute force rules the allocation of the goods. The claim to combine socialism and democracy is as much a fraud as the assertion that socialism would bring prosperity. Socialism’s true face is totalitarian despotism .

It is no wonder that even a degenerate capitalism produces more prosperity than the best socialism. Therefore, the task ahead cannot be to remove capitalism in favor of socialism but to make capitalism better. In other words: make it more capitalist.

German-born Antony Mueller teaches economics at the Federal University of Sergipe (UFS) in Brazil.



Edited 1 time(s). Last edit at 09/11/2018 03:01AM by Jennifer.

"The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."

~Winston Churchill